Select Specialty Hospital-Ann Arbor v. The Secretary of Health and Human Services

Filing 18

OPINION and ORDER GRANTING Defendant's Motion to Dismiss re 7 Signed by District Judge Terrence G. Berg. (KJac)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
SELECT SPECIALTY HOSPITALANN ARBOR, INC. (MATTILA)
v.

Plaintiff,

Case No. 14-14412
HON. TERRENCE G. BERG
HON. DAVID R. GRAND

THE SECRETARY OF HEALTH AND
HUMAN SERVICES,
Defendant.

/

OPINION AND ORDER
GRANTING DEFENDANT’S MOTION TO DISMISS (DKT. 7)
In this case, a hospital that treated a patient covered by Medicare is suing
the Secretary of Health and Human Services for reimbursement of the costs for over
three months of treatment and procedures. The agency argues that the hospital
never submitted its reimbursement claim correctly, and therefore this case is not
properly before this Court and must be dismissed.
I.

PROCEDURAL POSTURE

Plaintiff Select Specialty Hospital-Ann Arbor, Inc. brings this suit against
Defendant Secretary of Health and Human Services seeking declaratory and
injunctive relief. (See Dkt. 1, §§ 25-26, p. 6.) Plaintiff, a hospital in Ypsilanti,
Michigan, treated patient Milda Mattila (“Mattila”) from December 27, 2012
through April 12, 2013. (Dkt. 13, p. 6.) The parties agree that Mattila was insured
by Medicare when Plaintiff treated her. (See Dkt. 1, ¶ 4; Dkt. 7, p. 7.) However,
Medicare has not reimbursed Plaintiff for the care Plaintiff provided because it

maintains that Plaintiff has not filed a valid claim for reimbursement and the
statutory deadline to do so has expired. (See Dkt. 7, pp. 12-13.)
Defendant now moves to dismiss this case pursuant to Federal Rule of Civil
Procedure 12(b)(1). (Dkt. 7.) In its complaint, Plaintiff alleges subject matter
jurisdiction on the bases of federal question jurisdiction pursuant to 28 U.S.C.
§1331 and diversity jurisdiction pursuant to 28 U.S.C. §1332. (Dkt. 1, ¶¶ 13-18.)
Defendant, however, maintains that this Court has no subject matter jurisdiction
over this case on either basis. (See Dkt. 7.)
Defendant argues that diversity jurisdiction does not exist because agencies
of the United States are not citizens of any state for the purposes of 28 U.S.C.
§1332. (Dkt. 7, p. 9.) Moreover, 42 U.S.C. §405(h), incorporated into the Medicare
Act via 42 U.S.C. §1395ii, prevents this Court from exercising federal question
jurisdiction because Plaintiff: (1) never presented its claim to the Secretary or
received an initial claim determination; and thus could not (2) exhaust its
administrative remedies by appealing an initial determination through the
administrative appeals process and receive a final decision from the Secretary for
this Court to review. (Id. at 6, 11-12.) In short, Defendant alleges that Plaintiff is
attempting to bypass the administrative review process and proceed directly to
federal court.
In response, Plaintiff argues that: (1) it should not be required to exhaust its
administrative remedies because proceeding through the administrative review
process would have been futile; (2) Defendant should be equitably estopped from

2

arguing that Plaintiff failed to exhaust its administrative remedies because the
employee of a Medicare contractor gave Plaintiff erroneous information regarding
the filing and status of its claim; or (3) the Court should rely on equitable tolling
principals to excuse Plaintiff’s failure to resubmit its claim within the Medicare
Act’s one-year deadline established in 42 C.F.R. 424.44(a)(1). (Dkt. 13, pp. 8-13.) In
its supplemental brief submitted on October 19, 2015, Plaintiff also maintains that
the Court should find that the six-month extension of time to file a claim pursuant
to 42 C.F.R. §424.44(b)(5) applies. (Dkt. 17, p. 4.)
After oral argument on September 28, 2015, the Court directed the parties to
submit supplemental briefing on the following points: (1) when Plaintiff was sent a
computer-generated message rejecting Plaintiff’s claim for reimbursement; (2) the
format of the message and what details it contained; (3) when Plaintiff received the
claim rejection message; (4) whether Douglas C. Dyer (“Dyer”) is employed by
Novitas Solutions, Inc.; and (5) the dates and details of any conversations that took
place between Plaintiff and Dyer. The parties timely submitted their supplemental
briefs by October 19, 2015. (See Dkts. 16-17.)
Defendant’s motion is now fully briefed, all supplemental briefing has been
submitted, and oral argument has been heard. While the Court has some sympathy
with Plaintiff’s dilemma, the agency must be given the opportunity to decide, before
the Court intervenes, whether and how to apply its own policies and regulations,
and to correct any irregularities in its own procedure, in the context of these
particular facts. Because the Court will find that the agency has not yet been

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afforded such an opportunity, the law requires that Defendant’s motion be
GRANTED and this case be DISMISSED WITHOUT PREJUDICE for lack of
subject matter jurisdiction.
II. FACTUAL BACKGROUND
The Medicare Act establishes a federal program of health insurance for the
elderly and disabled. See 42 U.S.C. §1395, et seq. The Secretary of Health and
Human Services (“the Secretary”) administers the Medicare program, but has
delegated most administrative responsibilities to Centers for Medicare and
Medicaid Services (“CMS”). See Health Care Financing Administration; Statement
of Organization, Functions, and Delegations of Authority, 46 Fed. Reg. 56,911 (Nov.
19, 1981); see also 42 C.F.R. §400.200. CMS is authorized to use contractors to
administer the Medicare program. See 42 U.S.C. §§1395h, 1395u; 42 C.F.R. §421.5.
In this case, CMS authorized Novitas to assist with processing Medicare claims, and
as a Medicare administrative contractor, Novitas is bound by the Medicare statute,
the regulations and guidelines issued by CMS.
In October 2012, Milda Mattila received a contaminated methylprednisolone
acetate (“MPA”) injection for joint pain at the Michigan Pain Specialists clinic in
Ann Arbor, Michigan. (Dkt. 13, p. 6.) As a result of ensuing complications, Mattila
required significant medical intervention and treatment at Plaintiff Select Specialty
Hospital-Ann Arbor, Inc.’s Ypsilanti, Michigan facility from December 27, 2012 to
April 12, 2013. (See Dkt. 1, ¶¶ 2-3; Dkt. 1, Ex. E, p. 1.) Mattila was covered by
Medicare health insurance at the time of treatment. (Dkt. 7, p. 17.)

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On November 16, 2012, Mattila filed a products liability suit in the Eastern
District of Michigan arising out of the contaminated MPA injection. (Dkt. 13, p. 6,
Ex. B.) Before judgment could be rendered, however, the Defendant in that case,
New England Compounding Pharmacy, Inc. (“New England”), filed for Chapter 11
bankruptcy. (Dkt. 13, p. 6, Ex. C.) Consequently, Mattila’s suit was stayed on
January 31, 2013. (Dkt. 13, p. 6.) On February 28, 2013, Mattila’s case was
transferred to the District of Massachusetts as part of a multidistrict litigation
proceeding against Defendant New England.1 See Mattila et al v. New England
Compounding Pharmacy, Inc., Case No. 12-15083 (E.D. Mich), Dkt. 12.
On June 25, 2013,2 Novitas received an electronically-submitted claim from
Plaintiff requesting a conditional payment totaling $501,515.23 for Mattila’s
medical care. (See Dkt. 1, ¶¶3-4; Dkt. 7, Ex. 1.) By filing this type of claim, Plaintiff
asked Medicare to pay Mattila’s treatment expenses now on the condition that
Medicare would be reimbursed from any lawsuit settlement proceeds. (Dkt. 7, Ex. 2,
¶ 5.) Plaintiff submitted its claim via the Fiscal Intermediary Shared System
(“FISS”), a computer system through which enables providers like Plaintiff to
communicate with Novitas in order to submit claims and review claim-related
information. (See Dkt. 16, Ex. 1, ¶¶3-4; Dkt. 17, p. 2.)

This multidistrict litigation proceeding is open and ongoing as of the date of this order. See In re:
New England Compounding Pharmacy, Inc., MDL no. 2491, Case No. 13-md-2491 (D. Mass.)

1

The parties dispute the date Plaintiff submitted its Mattila claim – Plaintiff maintains that it
submitted its claim on June 21, 2013 (Dkt. 17, p. 2) while Defendant asserts that the claim was
submitted on June 25, 2013 (Dkt. 16, p. 2). The computer-generated claim rejection message
indicates that the claim was received on June 25, 2013. (See Dkt. 7, Ex. 1.) The Court thus recognizes
June 25, 2013 as the date Plaintiff’s claim was received for processing by Novitas.
2

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On July 25, 2013, approximately one month after Plaintiff submitted the
Mattila claim, Novitas posted notice of its rejection on FISS. (See Dkt. 7, Ex. 1; Dkt.
17, Ex. A, ¶ 5.) Plaintiff acknowledges becoming aware of the rejection notice on or
about that same date. (Dkt. 17, p. 2.) FISS automatically rejects incorrectly-coded
claims. (Dkt. 7, Ex. 2, ¶ 6.) In this case, there was a coding discrepancy because the
claim was submitted under “Claim Adjustment Reason Code 20” (“CARC 20”), a
code indicating that Plaintiff has already received payment from a primary liability
carrier and is billing Medicare as a secondary payer, but with a “Value Code”
indicating that no money had been received from the primary insurer.3 (See Dkt 7,
Ex. 1 and Ex. 2, ¶ 7-8.) A claim coded under CARC 20 is thus inconsistent with the
conditional payment Plaintiff was seeking from Medicare and with the Value Code
Plaintiff submitted. Accordingly, FISS automatically rejected Plaintiff’s conditional
payment claim because it was billed incorrectly. (See Dkt. 7, Ex. 1 and Ex. 2, ¶ 7.)
Upon detecting the discrepant code values, FISS generated a notice
explaining that the claim had been rejected under rejection code 31266. (See Dkt. 7,
Ex. 1.) Rejection code 31266 is used to indicate a discrepancy between the CARC

A Claim Adjustment Reason Code (“CARC”) is used to communicate financial adjustments to a
claim such as reductions or increases in payment – in short, why a claim was paid differently than it
was billed. Centers for Medicare and Medicaid Services, Medicare Claims Processing Manual, ch. 22
§60.2, issued on July 2, 2015, available at https://www.cms.gov/Regulations-andGuidance/Guidance/Manuals/downloads/clm104c22.pdf. CARC 20 indicates that an injury or illness
is covered by the liability carrier. Washington Publishing Company, Claim Adjustment Reason
Codes, http://www.wpc-edi.com/reference/codelists/healthcare/claim-adjustment-reason-codes/ (last
updated Jan. 1, 2016). A Value Code is used to report the amount paid on a claim by the primary
insurer. (Dkt. 7, Ex. 2, ¶ 8.) According to the FISS rejection notice, Plaintiff submitted its claim with
a Value Code of zero or that was left blank. (See Dkt. 7, Ex. 1.) Plaintiff thus submitted a claim
purporting to bill Medicare as the secondary payer because payment had been received from a
primary insurer but also indicating that the primary insurer had not paid anything on Plaintiff’s
claim. (See id.)

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and the Value Code. (Dkt. 7, Ex. 2, ¶ 8.) The notice included a narrative statement
explaining that there was a discrepancy between the CARC and Value Code
charges4 and directed Plaintiff to “cancel the rejected claim, make corrections as
needed on a new claim and submit.” (Dkt. 7, Ex. 1.) Plaintiff, however, never
followed these instructions and cannot resubmit this particular claim now because
the one-year deadline to do so established by 42 C.F.R. §424.44(a)(1) has expired.5
(See Dkt. 13, p. 7.)
Plaintiff maintains that it relied on incorrect instructions and information
from Novitas employee Douglas Dyer. Dyer has worked for Novitas since 2008, and
has been a manager in the Claims Department since July 2012. (Dkt. 16, Ex. 1, ¶ 9.)
According to Plaintiff, it “had discussions” with Dyer at some point prior to
submitting the Mattila claim about how to properly submit it. (Dkt. 17, Ex. A, ¶ 3.)
Plaintiff does not document when these conversations occurred, how many such
conversations Plaintiff had with Dyer, or their content,6 but Plaintiff asserts that it

The narrative statement in the rejection notice explains that the claim “was submitted containing a
value code with the associated charges being either blank or zero” but “was transmitted with one of
the following claim adjustment reason codes (CARCS) with charges greater than zero: […] 20 […].”
(Dkt. 7, Ex. 1.)
4

Section 424.44(a)(1) states in relevant part that “for services furnished on or after January 1, 2010,
the claim must be filed no later than the close of the period ending 1 calendar year after the date of
service.” Mattila was treated from December 27, 2012 through April 12, 2013. (See Dkt. 1, Ex. E, p.
1.) Plaintiff submitted a claim for Mattila’s treatment on or about June 25, 2013 that was rejected on
July 25, 2013. (See Dkt. 7, Ex. 1; Dkt. 17, Ex. A, ¶ 5.) Plaintiff thus had at most approximately eight
months from the rejection date to correct and resubmit its claim.
5

At the hearing, the parties informed the Court that Plaintiff’s phone conversations with Dyer were
likely not recorded. There are no call logs, recordings, or transcripts in the record. With respect to
the content of these alleged conversations, Plaintiff has filed the affidavit of Tonya Williams who
states that Plaintiff “had discussions” with Dyer prior to submitting the Mattila claim and had
“subsequent discussions” with Dyer, “specifically on October 23, 2013”, which caused Plaintiff to
believe that its claim was denied and that its resubmission would be futile. (Dkt. 17, Ex. A, ¶¶ 4-8.)
6

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coded its claim under CARC 20 because Dyer instructed Plaintiff to do so. (Id. at ¶¶
3-4.)
After its claim was rejected, Plaintiff maintains that it did not resubmit its
claim because of Dyer’s representation that any such action would be futile. (See id.
at ¶¶ 6-8.) On October 23, 2013, three months after Plaintiff acknowledges
becoming aware of the FISS rejection notice and resubmission instruction, Plaintiff
asserts that it spoke with Dyer again about the Mattila claim. (Id. at ¶ 6.) Dyer
allegedly stated that Medicare would not pay the claim until Mattila’s pending
litigation against New England was resolved. (Id.) Based solely on Dyer’s oral
representations, Plaintiff says it “understood the claim was denied” and believes
therefore that its resubmission “would be futile.” (Id. at ¶¶ 6-8.) The next day, on
October 24, 2013, Plaintiff sent Mattila a letter informing her that its Medicare
claim for her inpatient stay had been denied and that she was required to pay the
$501,515.23 balance within 30 days. (Dkt. 1, Ex. B.) Plaintiff, however, had not
received any initial determination from Novitas7 in a “Remittance Advice” notice8 or

Pursuant to 42 U.S.C. §1395(a)(2)(A), an initial claim determination “shall be concluded by not
later than the 45-day period beginning on the date the fiscal intermediary or the carrier, as the case
may be, receives a claim for benefits” and notice of the determination shall be mailed to the claimant
“before the conclusion of such 45-day period.”
7

An electronic or paper Remittance Advice notice is a notice of initial determination that a Medicare
contractor such as Novitas will use to communicate claims processing decisions to claimants and that
can include the initial determination as well as instructions for requesting a redetermination if the
claimant disagrees with the decision. See Centers for Medicare and Medicaid Services, Remittance
Advice Information: An Overview (April 2013), available at https://www.cms.gov/Outreach-andEducation/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Remit-Advice-OverviewFact-Sheet-ICN908325.pdf; see also 42 C.F.R. § 405.921(b). In this case, Plaintiff never received any
Remittance Advice notice. Plaintiff only received a notice via FISS of rejection for improper coding
with an instruction to correct the error and resubmit the claim. (See Dkt. 7, Ex. 1.)
8

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in any other form, indicating definitively that its claim has been denied or even
considered.
On February 24, 2014, approximately four months after its last documented
conversation with Dyer and seven months after receiving the rejection notice,
Plaintiff sent a Medicare Redetermination Request9 to Novitas. (Dkt. 1, Ex. 5.)
Plaintiff requested that Novitas: (1) reconsider its denial of Plaintiff’s claim; and (2)
refer Plaintiff’s claim to a Medicare Secondary Payer Recovery Contractor for
conditional payment. (Id.) Plaintiff does not reference Dyer or the rejection notice in
the redetermination request, but states “that Medicare has denied [Plaintiff’s]
claims because Mrs. Mattila has asserted a products liability claim against the
manufacturer of the tainted injection [manufactured by] New England
Compounding Pharmacy, Inc.” (Id. at 1.)

The procedures for conducting appeals of Medicare claims are well-established. See 42 C.F.R. §§
405.900 et seq.; 42 U.S.C. §§ 1395ff. The Medicare claim appeal process consists of five steps: (1)
submitting a redetermination request to a Medicare contractor after receiving an initial
determination; (2) reconsideration by a qualified independent contractor of the redetermination
decision; (3) a hearing before an Administrative Law Judge (“ALJ”); (4) review by the Medicare
Appeals Council of the ALJ’s decision; and (5) judicial review of the Secretary’s final decision in
United States District Court. See generally Centers for Medicare and Medicaid Services, Medicare
Parts A & B Appeals Process (Feb. 2015), available at https://www.cms.gov/Outreach-andEducation/Medicare-Learning-Network-MLN/MLNProducts/downloads/medicareappealsprocess.pdf.
Submitting a redetermination request to a Medicare Administrative Contractor such as Novitas is
thus the first of five steps in the Medicare claims appeal process. See 42 C.F.R. § 405.904(a)(2); see
also Medicare Parts A & B Appeals Process, pp. 2-3. A request for redetermination must be filed
within 120 days of receiving notice of the initial determination and instructions for submitting a
redetermination request. See 42 C.F.R. § 405.942(a). The Medicare Administrative Contractor will
consider the request and will issue a decision within 60 days of receipt of the request for
redetermination. See 42 C.F.R. § 405.950(a). Here, Plaintiff submitted a request for redetermination
approximately seven months after receiving the claim rejection notice and without having received a
Remittance Advice notice or initial determination. When Plaintiff did not receive a reply to its stepone request, Plaintiff proceeded to the fifth step in the appeals process – seeking judicial review in
federal court.
9

9

After waiting approximately eight months without receiving any response
from Novitas10 (See Dkt. 17, Ex. A, ¶ 10.), Plaintiff filed the above-captioned case in
this Court on November 18, 2014 (See Dkt 1). Defendant maintains that subject
matter jurisdiction does not exist. (Dkt. 7, p. 4.) Defendant also asserts that, within
a month of the claim’s submission, it provided Plaintiff with notice of and an
explanation for the claim rejection, and instructed Plaintiff to correct and resubmit
the claim. (Id. at 5-6.) Because Plaintiff’s claim was not denied by Medicare but
merely rejected and never resubmitted, Medicare has never had the opportunity to
make an initial claim determination that Plaintiff could appeal through the
Medicare appeals process.11 (Id. at 10-13.) The one-year deadline for submitting a
claim has now expired. Accordingly, Defendant argues that this case must be
dismissed for lack of jurisdiction. (See id. at 6.)

Pursuant to 42 U.S.C. §1395ff(b), a request for redetermination “shall be concluded by not later
than the 60-day period beginning on the date the fiscal intermediary or the carrier, as the case may
be, receives a request for a redetermination.”
10

A rejection, unlike a denial, is not an appealable initial determination. See 42 C.F.R. § 405.924(b)
(“A finding that a request for payment or other submission does not meet the requirements for a
Medicare claim as defined in § 424.32 of this chapter, is not considered an initial determination.”);
see also 42 C.F.R. § 405.926. Appeals rights are detailed in 42 U.S.C. §1395ff(b), which states in
relevant part:
11

Subject to subparagraph (D), any individual dissatisfied with any initial determination
under subsection (a)(1) of this section shall be entitled to reconsideration of the
determination, and, subject to subparagraphs (D) and (E), a hearing thereon by the Secretary
to the same extent as is provided in section 405(b) of this title and, subject to paragraph (2),
to judicial review of the Secretary’s final decision after such hearing as is provided in section
405(g) of this title. For purposes of the preceding sentence, any reference to the
“Commissioner of Social Security” or the “Social Security Administration” in subsection (g) or
(l) of section 405 of this title shall be considered a reference to the “Secretary” or the
“Department of Health and Human Services”, respectively.
10

III.

LEGAL STANDARD

Defendant moves to dismiss Plaintiff’s Complaint pursuant to Federal Rule of
Civil Procedure 12(b)(1) on the ground that the Court does not have subject matter
jurisdiction over this case under 28 U.S.C. §1331, 28 U.S.C. §1332, or the Medicare
appeals process. (See Dkt. 7.) Where subject matter jurisdiction is challenged in a
Rule 12(b)(1) motion, the Plaintiff bears the burden of proving jurisdiction. See Moir
v. Greater Cleveland Regional Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990).
Subject matter jurisdiction is established on the basis of federal question or
diversity jurisdiction. See 28 U.S.C. §§ 1331-1332. Because federal agencies are not
citizens of any state and cannot be sued in diversity, the only possible basis for
subject matter jurisdiction in this case is federal question jurisdiction.12 Texas v.
Interstate Commerce Comm’n, 258 U.S. 158, 160, (1922) (“…both defendants are
sued as corporate entities created by the United States for governmental purposes;
and, if that be their status, they are not citizens of any state…”); Koppers Co. v.
Garling & Langlois, 594 F.2d 1094, 1097 n. 1 (6th Cir. 1979) (The United States is
“a party who may not be sued in diversity.”).
Rule 12(b)(1) motions to dismiss for lack of subject matter jurisdiction fall
into two general categories: facial attacks and factual attacks. See Fed. R. Civ. P.
12(b)(1); United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack

Here, Plaintiff brings an action against the Secretary of Health and Human Services in her official
capacity. (Dkt. 1, p. 1.) When a Plaintiff brings an action against a Defendant in his or her official
capacity, that action is treated as an action against the entity of which the Defendant is an agent.
Kentucky v. Graham, 473 U.S. 159, 165 (1985). Since the Secretary of Health and Human Services is
an agent of the United States, the action must be treated as if it were an action against the United
States, which is not a party that can be sued in diversity. See Graham, 473 U.S. at 165; see also
Koppers Co. v. Garling & Langlois, 594 F.2d 1094, 1097 n. 1 (6th Cir. 1979).

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challenges the sufficiency of the pleading itself. Where the Rule 12(b)(1) motion
presents a facial attack, the Court accepts the material allegations in the complaint
as true and construes them in the light most favorable to the nonmoving party,
similar to the standard for a Rule 12(b)(6) motion. Ritchie, 15 F.3d at 598 (citing
Scheuer v. Rhodes, 416 U.S. 232, 235-37 (1974).)
In contrast, a factual attack is “not a challenge to the sufficiency of the
pleading’s allegation, but a challenge to the factual existence of subject matter
jurisdiction.” Id. Where the motion presents a factual attack, the allegations in the
complaint are not afforded a presumption of truthfulness and the Court weighs the
evidence to determine whether subject matter jurisdiction exists. On a factual
attack, the Court has broad discretion to consider extrinsic evidence, including
affidavits and documents, and can conduct a limited evidentiary hearing if
necessary. See DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir. 2004); Ohio Nat’l
Life Ins. Co. v. United States, 922 F.2d 320, 325 (6th Cir. 1990). In this case,
Defendant is making a factual challenge to the Court’s jurisdiction. (See Dkt. 7, p.
9.)
IV.

ANALYSIS

Defendant’s motion presents the question whether this Court has subject
matter jurisdiction over this case. Given that diversity jurisdiction is not available
in an action against a federal agency because such an agency is a not citizen of any
state for purposes of 28 U.S.C. § 1332, Plaintiff must establish jurisdiction on the
basis of a federal question. According to Defendant, federal question jurisdiction

12

does not exist because the Medicare Act, pursuant to 42 U.S.C. §405(g)-(h),13
provides that the sole route to judicial review is through the Medicare appeals
process and Plaintiff has not even presented a valid claim let alone completed that
process. (Dkt. 7, pp. 6-7.)
Defendant argues that Plaintiff cannot pursue the Medicare appeals process
because it seeks to appeal a claim that has been rejected for improper coding rather
than formally denied via an initial determination. (Id.) Given that a rejection is not
a denial and therefore not an initial determination appealable through the
Medicare appeals process, Defendant asserts that Plaintiff has satisfied neither the
presentment (presented a valid claim) nor exhaustion (exhausted its administrative
remedies) requirements for judicial review under § 405(g). (Id.) Defendant asserts
that Plaintiff is not entitled to have its claim considered even if it were to be
corrected and resubmitted because the deadline for submitting a claim has now
passed.14
Plaintiff does not argue that it has properly presented a claim. Instead,
Plaintiff requests equitable relief. First, Plaintiff argues that the exhaustion
requirement should be waived in this case because it was futile for Plaintiff to

These provisions of the Social Security Act have been incorporated into the Medicare Act. Section
405(h) has been incorporated into the Medicare Act by 42 U.S.C. § 1395ii while the judicial review
provisions of § 405(g) have been incorporated into the Medicare Act by 42 U.S.C. § 1395ff(b)(1)(A).

14 At the hearing, when asked whether Medicare would consider Plaintiff’s claim after the statutory
deadline had expired were Plaintiff to resubmit it with the correct coding, Defense counsel could not
say definitively whether the claim would be considered despite being untimely, but emphasized that
Medicare would not be required by law to consider it. In light of Medicare’s statutory purpose of
providing coverage, refusing to consider Plaintiff’s claim simply because of an unintentional coding
error would appear a callous and draconian action by the agency.
13

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attempt to exhaust its administrative remedies beyond its request for a
redetermination submitted to Novitas. (Dkt. 13, pp. 9-11.) Moreover, Defendant
should be equitably estopped from arguing failure to exhaust given Plaintiff’s
reliance on Dyer’s alleged misrepresentations regarding claim status and futility of
resubmission. (Id. at 11-13.) Finally, if the Court decides that it does not have
jurisdiction, the Court should “toll the time requirements of 42 C.F.R. §
424.44(a)(1)15 given Defendant’s bad faith actions in processing [Plaintiff’s] claim”
(Id. at 11) or order Novitas to grant Plaintiff a six-month extension of the claim
submission deadline pursuant to 42 C.F.R. § 424.44(b)(5)16 (Dkt. 17, p. 4).
The Court has carefully considered the parties’ arguments and all available
evidence and will find that Plaintiff has not met its burden of establishing that
jurisdiction exists in this case. Because Plaintiff has not established that it has
satisfied either the presentment or exhaustion requirement of §405(g), this case will
be dismissed for lack of subject matter jurisdiction.
A. The Presentment and Exhaustion Requirements Are Not Met
Plaintiff contends that the Court has subject matter jurisdiction over this
case pursuant to 28 U.S.C. § 1331. The Court’s jurisdiction over Medicare cases is

This section of the Code of Federal Regulations requires that a claim “must be filed no later than
the close of the period ending 1 calendar year after the date of service.” 42 C.F.R. § 424.44(a)(1).

15

This section provides that where a failure to meet the one-year deadline for filing a claim “was
caused by error or misrepresentation of an employee, Medicare contractor (including Medicare
Administrative Contractor, intermediary, or carrier), or agent of HHS that was performing Medicare
functions and acting within the scope of its authority,” the time to file a claim “will be extended
through the last day of the sixth calendar month following the month in which either the beneficiary
or the provider or supplier received notification that the error or misrepresentation” was corrected.
42 C.F.R. § 424.44(b)(5).

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limited by 42 U.S.C. §§ 405(g) and (h), which specifically prevent a claimant from
pursuing judicial review of claims “arising under” the Medicare Act, 42 U.S.C. §
1395, et seq.,17 except where the Secretary issues a “final decision”, as provided in
42 U.S.C. § 405(g). A “final decision” is rendered on a Medicare claim only after the
individual claimant has pressed her claim through all designated levels of
administrative review. See 42 U.S.C. §§ 1395hh, 1395ii.
As 42 U.S.C. § 405(h) states, “[n]o action against the United States, [the
Secretary], or any officer or employee thereof shall be brought under section 1331 or
1346 of Title 28 to recover on any claim arising under this subchapter.” According to
the Supreme Court, “§ 405, to the exclusion of 28 U.S.C. § 1331, is the sole avenue
for judicial review for all ‘[claims] arising under’ the Medicare Act.” Heckler v.
Ringer, 466 U.S. 602, 615, (1984) (alteration in original). This section thus severely
restricts the authority of federal courts because it “demands the ‘channeling’ of
virtually all legal attacks through the agency”. Shalala v. Illinois Council on Long
Term Care, Inc., 529 U.S. 1, 13 (2000).
Section 405(h) is not a complete bar to judicial review, however. Any person
or group of individuals who wants to challenge an adverse final decision of the

The parties do not dispute that Plaintiff’s claim “arises under” the Medicare Act and regardless
that language is to be read very broadly. See Heckler v. Ringer, 466 U.S. 602, 615 (1984). Just as the
Heckler Plaintiffs’ claims were claims that Medicare should pay for their surgery, Plaintiff’s claim in
this case is that Medicare should pay it for services performed. See id. at 614 (“It seems to us that it
makes no sense to construe the claims of those three respondents as anything more than, at bottom,
a claim that they should be paid for their BCBR surgery.”). The statute is clear that Plaintiff may
only pursue judicial review under 42 U.S.C. §§ 405(g) and (h) after exhausting its administrative
remedies. The Court’s analysis will therefore focus on whether Plaintiff satisfied the presentment
and exhaustion requirements of §405(g).
17

15

Secretary in federal court may do so by satisfying the jurisdictional requirements of
42 U.S.C. § 405(g):
Any individual, after any final decision of [the Secretary] made after a
hearing to which he was a party, irrespective of the amount in controversy,
may obtain a review of such decision by a civil action commenced within sixty
days after the mailing to him of notice of such decision or within such further
time as the [Secretary] may allow. Such action shall be brought in the district
court of the United States for the judicial district in which the plaintiff
resides, or has his principal place of business, or, if he does not reside or have
his principal place of business within any such judicial district, in the United
States District Court for the District of Columbia.
42 U.S.C. § 405(g). Section 405(g) thus specifies that a “final decision of [the
Secretary] made after a hearing” is a prerequisite for judicial review. According to
the Supreme Court, this requirement is “central to the requisite grant of subjectmatter jurisdiction—the statute empowers district courts to review a particular
type of decision by the Secretary, that type being those which are ‘final’ and ‘made
after a hearing.’” Weinberger v. Salfi, 422 U.S. 749, 764 (1975).
In Mathews v Eldridge, 424 U.S. 319 (1976), the Supreme Court held that the
“final decision” requirement of § 405(g) consists of two elements: (1) presentment of
a claim; and (2) exhaustion of administrative remedies. 424 U.S. at 328.
Defendant argues that Plaintiff has satisfied neither of these elements.
Presentment is a jurisdictional and nonwaivable requirement that a claim for
benefits must be presented to the Secretary in the first instance. See id. (“Absent
such a claim there can be no ‘decision’ of any type. And some decision by the
Secretary is clearly required by the statute.”). Presentment is satisfied “[s]o long as
the Secretary is given an opportunity to make an initial decision”. Caswell v.

16

Califano, 435 F. Supp. 127, 133 (D. Me. 1977) aff’d, 583 F.2d 9 (1st Cir. 1978) (citing
Mathews, 424 U.S. at 328-30).
Exhaustion requires that the administrative remedies prescribed by the
Secretary be exhausted before judicial review is available. Mathews, 424 U.S. at
328. The exhaustion requirement “assures the agency greater opportunity to apply,
interpret, or revise policies, regulations, or statutes without possibly premature
interference by different individual courts.” Illinois Council, 529 U.S. at 13. While
exhaustion is waivable in limited circumstances, the presentment requirement
must be satisfied first because it is a nonwaivable, essential, and distinct
precondition for § 405(g) jurisdiction. See Mathews, 424 U.S. at 328-29; see also
Ringer, 466 U.S. at 621 (exhaustion requirement cannot be satisfied because
claimant had “not given the Secretary an opportunity to rule on a concrete claim for
reimbursement”); Cathedral Rock of N. Coll. Hill, Inc. v. Shalala, 223 F.3d 354, 359
(6th Cir. 2000) (presentment is nonwaivable, exhaustion is waivable by the
Secretary); Wyninger v. Thompson, No. 03-2481 M1, 2004 WL 2375636, at *6 (W.D.
Tenn. Mar. 24, 2004) (Plaintiff could not show that exhaustion of administrative
remedies would be futile where the Secretary had not even issued an initial
determination.)
There is a “strong presumption that Congress intends judicial review of
administrative action.” Bowen v. Michigan Acad. of Family Physicians, 476 U.S.
667, 670 (1986). The Sixth Circuit has clarified, however, that “virtually all legal
challenges to an administrative determination must be channeled through the

17

Secretary’s administrative process before judicial review is available as set forth in
§ 405(g), and any claimed exceptions to this requirement of exhaustion of
administrative remedies must be examined critically.” Cathedral Rock, 223 F.3d at
359.
When bringing a claim through the prescribed administrative appeal process
would amount to “no review at all” of the claim, however, the Supreme Court has
stated that administrative appeals may be bypassed and 28 U.S.C. § 1331 invoked.
Illinois Council, 529 U.S. at 19. If channeling Plaintiff’s claims through the
Medicare review process “will amount to the ‘practical equivalent of a total denial of
judicial review,’ ” Plaintiff may bring those claims under 28 U.S.C. § 1331. Id. at 20
(quoting McNary v. Haitian Refugee Ctr., 498 U.S. 479, 497 (1991)).18
This exception is narrow and does not permit a party to avoid § 405(h) with a
mere showing that postponement of judicial review would mean inconvenience or
cost to Plaintiff. Id. at 22. As Illinois Council established, delays in the
administrative process, or hardships related to the delay, are not sufficient to allow
parties to proceed directly to federal court, and Congress was aware that it was

In McNary v. Haitian Refugee Ctr., Inc., 498 U.S. 479, 497 (1991), for example, the United States
Supreme Court held that a district court had general federal question jurisdiction to entertain a
class action brought by aliens who claimed that the INS was administering the Special Agricultural
Workers amnesty program in a way that violated due process and the Immigration Reform and
Control Act of 1986. The Supreme Court found that “restricting judicial review to the courts of
appeals as a component of the review of an individual deportation order is the practical equivalent of
a total denial of judicial review of generic constitutional and statutory claims.” Id. Other examples
where an agency practice or action has been found to totally preclude judicial review include Nat’l
Ass’n of Psychiatric Health Sys. v. Shalala, 120 F. Supp. 2d 33, 38 (D.D.C. 2000), where the District
Court had subject matter jurisdiction because forcing a hospital to violate a condition of participation
in the Medicare program and face termination from the program in order to contest the validity of a
rule was a total denial of judicial review.

18

18

imposing these costs and delays on health-care providers. See id. at 13; see also
Vertos Med., Inc., v. Novitas Sols., Inc., 2012 WL 5943542, *5 (S.D. Tex. Nov. 27,
2012). The question is whether Plaintiff “is simply being required to seek review
first through the agency or is being denied altogether the opportunity for judicial
review.” Cathedral Rock, 223 F.3d at 360. Here, Plaintiff has not made a plausible
showing of a legal impossibility to judicial or administrative review; therefore, the
Court will not find complete preclusion of judicial review in this case.
1. Plaintiff has not Satisfied the Presentment Requirement
Here, Plaintiff does not argue that it has satisfied the presentment
requirement, but even if Plaintiff asserted that it had, this argument would fail
because Plaintiff never received even an initial determination on its claim. While
Plaintiff did attempt to submit a claim, attempting to submit a claim is not the same
as presenting a claim. See Wright v. Sebelius, 818 F. Supp. 2d 1153, 1160 (D. Neb.
2011) (holding that attempting to submit a claim and receiving a preliminary
calculation of benefits from a Medicare contractor does not satisfy presentment
because no initial determination subject to reconsideration had been made).
Plaintiff’s claim was rejected for improper coding. Where Medicare or one of
its designated contractors like Novitas finds “that a request for payment or other
submission does not meet the requirements for a Medicare claim as defined in §
424.32 of this chapter, [such a finding] is not considered an initial determination.”
42 C.F.R § 405.924(b). Plaintiff did not correct and resubmit its claim even though
the rejection notice it received contained an explanation of the reason for the

19

rejection and instructions that the claim needed to be resubmitted. As a result,
Plaintiff’s claim was never presented to the Secretary, or any agent, for
consideration.
Consequently, Plaintiff has never received any formal indication such as a
Remittance Advice notice that its claim had been accepted, considered, or denied.
The only documented, written communication Plaintiff has received in response to
its attempt to submit a claim is a notice indicating that Plaintiff’s claim needed to
be corrected and resubmitted because it had been automatically rejected due to a
coding error. Plaintiff did submit a redetermination request some seven months
after receiving the claim rejection notice, but it did so without first receiving the
requisite Remittance Advice notice containing the initial determination to be
reconsidered. See Centers for Medicare and Medicaid Services, Medicare Parts A &
B Appeals Process, pp. 2-3 (Feb. 2015); see also 42 C.F.R. § 405.942(a).
Because Plaintiff’s claim was not pending in FISS when the redetermination
request was submitted, there was no denial or initial determination of any kind to
reconsider. While Plaintiff contends that Novitas employee Dyer told Plaintiff that
the claim had been denied, the record is clear that the agency was never given an
opportunity to make an initial determination and Plaintiff never received any
formal indication that such a determination had been made. Without an initial
determination, or the opportunity for the Secretary to make one, a claim has not
been presented for purposes of §405(g). See Mathews, 424 U.S. at 328-30; see also
Caswell, 435 F. Supp. at 133.

20

Accordingly, Plaintiff has not met the nonwaivable presentment requirement
for judicial review pursuant to § 405(g) and the Court cannot exercise subject
matter jurisdiction over this case. The Court will nevertheless address Plaintiff’s
arguments that it should not be required to exhaust its administrative remedies. As
explained in greater detail below, however, Plaintiff, a provider and an experienced
claimant in the Medicare claims process, is not excused from inexplicably
disregarding the FISS notice and otherwise failing to adhere to established
Medicare procedure and statutory deadlines.
2. Plaintiff has not Satisfied the Exhaustion Requirement
As noted above, Plaintiff cannot show that exhaustion of its administrative
remedies is futile without first satisfying the nonwaivable presentment
requirement. Even if the Court were to find that Plaintiff had presented a claim,
Plaintiff’s argument that the exhaustion requirement should be waived as futile is
unavailing.
The Supreme Court has made clear that if this administrative review process
is available, it must be followed, even if it is time-consuming, and even if the agency
cannot grant the relief sought. See Illinois Council, 529 U.S. at 20, 22–24. The
exhaustion requirement allows the agency to compile a detailed factual record and
apply agency expertise in administering its own regulations, something completely
lacking in this case. This requirement, although fundamental, may be waived in
limited circumstances.

21

In Bowen v. City of New York, 476 U.S. 467, 482-86 (1986), the Supreme
Court identified three factors to be considered in deciding whether to waive the
exhaustion requirement: (1) whether the claims at issue are collateral to the
underlying decision as to eligibility for entitlements; (2) whether claimants would
be irreparably harmed were the exhaustion requirement enforced against them; and
(3) whether exhaustion of administrative remedies would be futile. See also
Manakee Prof’l Med. Transfer Serv., Inc. v. Shalala, 71 F.3d 574, 580 (6th Cir.
1995); Day v. Shalala, 23 F.3d 1052, 1059 (6th Cir. 1994).
Plaintiff maintains that the third factor is determinative here. The
exhaustion of administrative remedies may be waived “if it would be futile, that is,
if there is no reasonable prospect that the applicant could obtain any relief by
pursuing them.” Manakee, 71 F.3d at 581. Plaintiff argues that despite receiving the
FISS notice that its claim had been rejected and could be corrected and
resubmitted, it understood from Dyer that its claim had been denied and that it
would be futile to resubmit it because Medicare would not pay the claim until the
products liability suit was resolved. (Dkt. 13, p. 9.) In light of Dyer’s
representations, and because Plaintiff received no response to its request for
redetermination when a response was required, Plaintiff maintains that its “only
recourse was to file suit” at that point. (Id.)
The Court disagrees. The five-step Medicare appeals process is wellestablished and explicitly provides for judicial review only of the Secretary’s final
decision. See 42 C.F.R. §§ 405.900 et seq. Even though Plaintiff never received an

22

initial determination from the Secretary, Plaintiff began the appeals process by
filing a redetermination request with Novitas. (Dkt. 1, Ex. E.) Plaintiff does not
reference Dyer in its request letter, but states that it understands its claim has
been denied and requests that this denial be reconsidered and its claim referred for
conditional payment. (See id.) Because Plaintiff never resubmitted its claim, no
claim was pending in FISS when the redetermination request was sent.
In general, upon receipt of a timely request for redetermination, Novitas is
required to mail or otherwise transmit written notice of its redetermination within
60 days. 42 C.F.R. § 405.950(a). Here, for reasons that are not known, Novitas never
responded to Plaintiff’s redetermination request. Plaintiff argues that this
oversight, in conjunction with Dyer’s representations, justifies forgoing the next
three steps in the appeals process and coming directly to federal court without an
initial or final decision from the Secretary for this Court to review.
Plaintiff, however, has never raised the issue of Novitas’ failure to respond
with either Novitas or Medicare and thus neither has had the opportunity to
investigate or correct this potential oversight. Alleging an irregularity in agency
procedure is insufficient support for a waiver of the exhaustion requirement. The
Supreme Court stated in Bowen, 476 U.S. at 484–85, that an agency’s “mere
deviation from the applicable regulations ... [is] fully correctable upon subsequent
administrative review since the claimant on appeal will alert the agency to the
alleged deviation.” See also Manakee, 71 F.3d at 581. The Bowen Court clarified
that exhaustion is not waivable “whenever a claimant alleges an irregularity in the

23

agency proceedings” because the agency’s expertise in applying its own regulations
should afford the agency “the opportunity to review application of those regulations
to a particular factual context.” 476 U.S. at 485. Plaintiff does not explain why, after
receiving no response from Novitas, it did not follow up with Novitas, express its
concerns about Dyer to Novitas, or proceed to the next levels of review in an
attempt to get a response from the agency and to draw attention to Novitas’
potential oversight or Dyer’s alleged misrepresentations.19
Plaintiff seeks to have its claim considered even though the one-year deadline
for submitting its claim has passed. Plaintiff maintains that the Court should
excuse this failure and extend the statutory deadline, either by applying principles
of equitable tolling or by ordering Novitas to grant Plaintiff a six-month extension
under 42 C.F.R. § 424.44(b)(5)20 to file its claim. Plaintiff cites no case law that
would support either request. The preliminary problem, however, is that neither
Novitas nor Medicare has been given the opportunity to consider the arguments for
relief that Plaintiff is making to this Court.
Before Plaintiff can come to this Court, Plaintiff must ask the agency to
interpret and apply its own regulations to this case because the agency may still be
able to grant Plaintiff the relief it seeks. See Illinois Council, 529 U.S. at 13. With

According to Plaintiff, it last spoke with Dyer regarding the Mattila claim on October 23, 2013,
nearly four months before it filed its request for a redetermination. (See Dkt 17, Ex. A, ¶ 6.) Plaintiff
asserts that it understood from that conversation that its Mattila claim was denied and that
resubmitting it would be futile. (Id. at ¶¶ 7-8.) Plaintiff does not claim that it spoke with Dyer
regarding the lack of response from Novitas or the viability of continuing the appeals process, thus it
is not apparent that Dyer ever made any representations relevant to those issues.
19

At oral argument, the Court raised the potential application of this regulation. Defense Counsel
expressed a reluctant willingness to consider its application, and Plaintiff’s Counsel stated that he
would make an argument under that regulation to Medicare.
20

24

respect to 42 C.F.R. § 424.44(b)(5), that section states that “[i]f CMS or one of its
contractors determines that a failure to meet the [one-year deadline] was caused by
error or misrepresentation of an employee, [or] Medicare contractor (including
Medicare Administrative Contractor, intermediary, or carrier)”, the time to file a
claim will be extended by six months from the date Plaintiff receives notice that the
error or misrepresentation has been corrected. No extension can be granted under
this section if the request is made “to CMS or one of its contractors more than 4
years after the date of service.” Id.
According to this regulation, either CMS or one of its contractors decides
whether a six-month extension is warranted. See 42 C.F.R. § 424.44(b)(5). If
Plaintiff believes that Dyer’s “error or misrepresentation” caused Plaintiff’s failure
to meet the one-year deadline for claim submission, Plaintiff can still make its case
to “CMS or one of its contractors”. See 42 C.F.R. § 424.44(b)(5). If Novitas or CMS
agrees a mistake was made that caused the delay, the regulatory language indicates
that Plaintiff will have an additional six months from the date it receives notice of
the correction of any error or misrepresentation to resubmit its Mattila claim and
seek the relief that Plaintiff currently seeks from this Court. Accordingly, on the
issue of futility, Plaintiff cannot show that there “is no reasonable prospect that the
applicant could obtain any relief by pursuing” the administrative review process.
Manakee, 71 F.3d at 581.
A well-established administrative review process exists for appealing the
Secretary’s initial determination of a Medicare claim. That administrative

25

procedure, far from precluding judicial review, explicitly provides for such review
once the Secretary has reached a final decision. Because Plaintiff fails to satisfy the
nonwaivable presentment requirement, it has not exhausted administrative
remedies as required by § 405(g) and (h). This Court therefore lacks subject matter
jurisdiction over this matter. Ringer, 466 U.S. at 621 (“Because Ringer has not
given the Secretary an opportunity to rule on a concrete claim for reimbursement,
he has not satisfied the nonwaivable exhaustion requirement of § 405(g). The
District Court, therefore, had no jurisdiction as to respondent Ringer.”).
B. The Court will not Apply Equitable Estoppel
Plaintiff further asserts that Defendant should be equitably estopped from
relying on exhaustion because of Dyer’s alleged misrepresentations that the Mattila
claim had been denied and that its resubmission would be futile. “The traditional
elements required to invoke equitable estoppel are a definite misrepresentation by
one party, intended to induce some action in reliance, and which does reasonably
induce action in reliance by another party to his detriment.” Heckler, 467 U.S. at 59;
See also U.S. v. Guy, 978 F.2d 934, 937 (6th Cir. 1992.)
Estoppel, however, cannot be used against the government on the same terms
as against private parties. Office of Personnel Management v. Richmond, 496 U.S.
414, 419 (1990); Heckler, 467 U.S. at 60; United States v. River Coal Co., Inc., 748
F.2d 1103, 1108 (6th Cir. 1984) (ordinarily the United States is not estopped by acts
of individual officers and agents); Housing Authority of Elliott County v. Bergland,
749 F.2d 1184, 1190 (6th Cir. 1984) (equitable estoppel generally is not available

26

against the government); Guy, 978 F.2d 934 (6th Cir. 1992) (equitable estoppel is
not available where taxpayer unreasonably relied on an IRS agent’s “certain oral
assurances” to taxpayer that the IRS would not pursue taxpayer for outstanding tax
liability). “At the very minimum, some affirmative misconduct by a government
agent is required as a basis of estoppel.” Guy, 978 F.2d at 937.
Plaintiff alleges bad faith on the part of Medicare generally, but not that
Dyer engaged in any “affirmative misconduct.” Moreover, Plaintiff does not claim
that it spoke with Dyer after submitting its redetermination request; there is thus
no allegation that Dyer ever made representations about the lack of response from
Novitas or the viability of the Medicare appeals process for Plaintiff. Furthermore,
Dyer’s representations were oral; and as the Supreme Court stated in Heckler:
It is not merely the possibility of fraud that undermines our confidence in the
reliability of official action that is not confirmed or evidenced by a written
instrument. Written advice, like a written judicial opinion, requires its
author to reflect about the nature of the advice that is given to the citizen,
and subjects that advice to the possibility of review, criticism, and
reexamination. The necessity for ensuring that governmental agents stay
within the lawful scope of their authority, and that those who seek public
funds act with scrupulous exactitude, argues strongly for the conclusion that
an estoppel cannot be erected on the basis of the oral advice....
467 U.S. at 65 (emphasis added).
Finally, the Court notes that equitable estoppel cannot be used as a way to
establish subject-matter jurisdiction. See American Fire & Casualty Co. v. Finn, 341
U.S. 6, 17–18 (1951) (principles of estoppel do not apply to subject-matter
jurisdiction); see also Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456
U.S. 694, 702 (1982) (“…no action of the parties can confer subject-matter

27

jurisdiction upon a federal court…[the] principles of estoppel do not apply…”);
Dunklebarger v. Merit Sys. Prot. Bd., 130 F.3d 1476, 1480 (Fed. Cir. 1997) (“It is
well settled that no action of the parties can confer subject-matter jurisdiction on a
tribunal and that the principles of estoppel do not apply to vest subject-matter
jurisdiction where Congress has not done so.”); Franzel v. Kerr Mfg. Co., 959 F.2d
628, 629-630 (6th Cir. 1992) (citing American Fire, 341 U.S. 6 for the proposition
that principles of estoppel may not be used to confer subject-matter jurisdiction).
Plaintiff cites no authority to the contrary.
As the Supreme Court noted in Heckler v. Community Health Services of
Crawford County, Inc., the general rule is that “those who deal with the
Government are expected to know the law and may not rely on the conduct of
Government agents contrary to the law.” 467 U.S. 51, 63 (1984). Providers like
Plaintiff are “repeat players” who voluntarily participate in the Medicare system,
and thus cannot claim lack of notice of the Secretary’s regulations. See Sebelius v.
Auburn Re’l Med. Ctr., 133 S. Ct. 817, 828 (2013). The Court will not apply
equitable estoppel here.
C. The Court will not Apply Equitable Tolling
Plaintiff’s final argument is that equitable tolling principals should excuse its
failure to resubmit its claim within the Medicare Act’s one-year deadline. See 42
C.F.R. 424.44(a)(1). Equitable tolling is argued to apply because of Defendant’s
unspecified “bad faith actions” in processing the claim. (Dkt. 13, p. 11.) Plaintiff
cites no case in which a court has tolled this one-year deadline. (See Dkts. 13, 17.)

28

Instead, Plaintiff relies on the Supreme Court’s decision in Am. Pipe & Const. Co. v.
Utah, a case involving the statute of limitations under the Clayton Act and Rule 23
of Federal Rules of Civil Procedure which established that the filing of a class action
complaint tolls the statute of limitations applicable to the claims of absent class
members. 414 U.S. 538, 552-53 (1974). In that case, which is easily-distinguishable
from the facts of this one, the Court generalized about the authority of federal
courts to toll a statute of limitations by stating that where a “plaintiff has refrained
from commencing suit during the period of limitation because of inducement by the
defendant” or “because of fraudulent concealment,” the Court tolls the statutory
period. Id. at 559.
This argument is underdeveloped and unavailing. “Congress vested in the
Secretary large rulemaking authority to administer the Medicare program.”
Auburn, 133 S. Ct. at 826 (holding that provision of Medicare statute setting 180day limit for a provider to appeal to the Provider Reimbursement Review Board was
not subject to equitable tolling). Plaintiff is a provider who has elected to participate
in the Medicare system and cannot claim ignorance of the regulations that govern
that system. Id. at 828. Plaintiff received a rejection notice directing it to correct its
own error and resubmit its claim. The one-year time limit to submit a claim is
clearly stated in 42 C.F.R. 424.44(a)(1), and exceptions to this deadline are listed in
42 C.F.R. 424.44(b). While the agency may equitably toll this limitations period
under the facts before the Court, Plaintiff has presented no sound basis which
would convince the Court to do so at this time.

29

V.

CONCLUSION

The purpose of Medicare is to create a program to reimburse health care
providers who have valid claims. In this case, that program has clearly not served
its function. However, a Plaintiff that ignores the available administrative
procedures may not simply choose its own path to federal court. Accordingly, for all
of the reasons explained above, Defendant’s Motion to Dismiss (Dkt. 7.) is
GRANTED. Plaintiff’s claims are DISMISSED WITHOUT PREJUDICE for lack
of subject matter jurisdiction.
SO ORDERED.
s/Terrence G. Berg
TERRENCE G. BERG
UNITED STATES DISTRICT JUDGE
Dated: February 8, 2016
Certificate of Service
I hereby certify that this Order was electronically submitted on February 8,
2016, using the CM/ECF system, which will send notification to each party.
s/A. Chubb
Case Manager

30