Delco, Inc. v. Corporate Management, Inc. et al

Filing 118

ORDER TO PROVIDE SUPPLEMENTAL BRIEFING. Signed by District Judge Keith Starrett on 7/6/12 (scp)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
HATTIESBURG DIVISION

DELCO, INC.

PLAINTIFF

v.

CIVIL ACTION NO. 2:11-CV-90-KS-MTP

CORPORATE MANAGEMENT, INC., et al.

DEFENDANTS

ORDER TO PROVIDE SUPPLEMENTAL BRIEFING
The Court previously dismissed Plaintiff’s claims against the Secretary of the
United States Department of Health and Human Services, the Centers for Medicare
and Medicaid Services, and the United States Department of Health and Human
Services. Delco, Inc. v. Corporate Mgmt., No. 2:11-CV-90-KS-MTP, 2011 U.S. Dist.
LEXIS 120825, at *8 (S.D. Miss. Oct. 18, 2011). The Court held that it had no
jurisdiction over Plaintiff’s claims against the Federal Defendants, as Plaintiff had
failed to exhaust the administrative review process required by 42 U.S.C. §§ 1395ii and
405(g)-(h). Id. at *5-*8.
The remaining Defendants – Corporate Management, Inc.; H. Ted Cain; Melody
Manor Convalescent Center, Inc.; and Leakesville Rehabilitation and Nursing Center,
Inc. – filed their own motion to dismiss [104] on the same basis, arguing that Sections
1395ii and 405(h) likewise require Plaintiff to exhaust its administrative remedies
prior to maintaining an action against them. The motion is fully briefed and ready for
review. Before the Court addresses the motion, it requires supplemental briefing on

two issues not addressed by the parties.
A.

Federal Question Jurisdiction
Pursuant to 28 U.S.C. § 1331, this Court has “original jurisdiction of all civil

actions arising under the Constitution, laws, or treaties of the United States.” 28
U.S.C. § 1331. According to the well-pleaded complaint rule, “for a federal court to have
‘arising under’ jurisdiction, the plaintiff’s federal law claims must appear on the face
of the complaint.” McKnight v. Dresser, Inc., 676 F.3d 426, 430 (5th Cir. 2012). “A
federal question exists only in those cases in which a well-pleaded complaint
establishes either that federal law creates the cause of action or that the plaintiff’s
right to relief necessarily depends on the resolution of a substantial question of federal
law.” Singh v. Duane Morris LLP, 538 F.3d 334, 337-38 (5th Cir. 2008).
A complaint stating a state-law cause of action may create federal question
jurisdiction if “(1) a federal right is an essential element of the state claim, (2)
interpretation of the federal right is necessary to resolve the case, and (3) the question
of federal law is substantial.” Budget Prepay, Inc. v. AT&T Corp., 605 F.3d 273, 280
(5th Cir. 2010). The “mere need to apply federal law in a state-law claim” is not
sufficient to invoke federal question jurisdiction. Id. Rather, there must be a
“substantial” federal right at issue, “indicating a serious federal interest in claiming
the advantages thought to be inherent in a federal forum.” Id. “Congress’s failure to
provide a private cause of action for violation of a federal statute” suggests that the
right at stake is not substantial enough to create federal question jurisdiction, but it
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is not determinative. Id. at 280-81. When addressing such issues, the Court must
consider the “balance of federal and state judicial responsibilities.” Singh, 538 F.3d at
338; see also Budget Prepay, 605 F.3d at 281.
Plaintiff asserted three causes of action against the remaining Defendants. In
Count III of the First Amended Complaint, Plaintiff alleged that Defendants
“committed statutory violations (including, at a minimum, violation of 18 U.S.C. § 669
and 18 U.S.C. § 1347) by wrongfully representing to CMS that they are entitled (under
the provider number and substituted NPI) to receive payment for services from a
federal health care benefit program and by wrongfully receiving and converting same
when Plaintiff actually provided the services . . . .” The statutes identified by Plaintiff
are criminal statutes, and Plaintiff has not identified a private cause of action for their
violation. Counts IV and V – for conversion and tortious interference with contract,
respectively – are state-law causes of action.
The Court orders Plaintiff to demonstrate that federal question jurisdiction
exists in this matter, either by virtue of a cause of action created by federal law or a
state-law cause of action which depends on the resolution of a substantial question of
federal law. Plaintiff shall file a supplemental brief within ten (10) days of the entry
of this order. Defendants shall then file a response within seven (7) days of the filing
of Plaintiff’s supplemental brief. If Plaintiff wishes to file a rebuttal, it may do so
within five (5) days of the filing of Defendants’ response.
B.

The Applicability of 42 U.S.C. § 405(h)
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As the Court previously noted, “[t]he Medicare Act limits the jurisdiction of
federal courts to review claims brought under the Act by requiring that virtually all
legal attacks be brought through the agency. Specifically, 42 U.S.C. § 1395ii makes §
405(h)’s bar of actions against the Commissioner of Social Security brought under §
1331 or § 1446 applicable to claims brought under the Medicare Act against the
Secretary, thereby purporting to make § 405(g) the exclusive judicial review method for
actions by the Secretary.” Nat’l Athletic Trainers Ass’n v. United States HHS, 455 F.3d
500, 503 (5th Cir. 2006) (internal citations and punctuation omitted, emphasis added).
In other words, 42 U.S.C. §§ 1395ii and 405(g)-(h) require a plaintiff to exhaust its
administrative remedies before bringing an action against the “United States, the
Commissioner of Social Security, or any officer or employee thereof” to recover on
claims arising under the Medicare Act. 42 U.S.C. § 405(h).
The Court dismissed Plaintiff’s claims against the Secretary, CMS, and HHS.
Defendants are private parties. Defendants argue, though, that 42 U.S.C. §§ 1395ii and
405(g)-(h) deprive the Court of jurisdiction over Plaintiff’s claims against them. The
Court orders Defendants to provide a supplemental brief addressing whether 42 U.S.C.
§§ 1395ii and 405(g)-(h), by their plain terms, apply to actions against private parties.
In other words, does the jurisdictional bar of Section 405(h) only apply to actions
against the United States, the Secretary, or HHS? Defendants shall file the
supplemental brief within ten (10) days of the entry of this order. Plaintiff shall then
file a response within seven (7) days of the filing of Defendants’ supplemental brief. If
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Defendants then wish to file a rebuttal, they may do so within five (5) days of the filing
of Plaintiff’s response.
SO ORDERED AND ADJUDGED this 6th day of July, 2012.

s/ Keith Starrett
UNITED STATES DISTRICT JUDGE

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